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Epoch Times
20 hours ago
- General
- Epoch Times
🎧 5 Revelations From the Newly Declassified Russia Records
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Yahoo
a day ago
- Business
- Yahoo
Market is seeing 'pockets of speculation,' not 'excessive' froth
Concerns about extended market valuations are reemerging as the S&P 500 (^GSPC) and the Nasdaq Composite (^IXIC) trade at record highs. PNC Asset Management Group chief investment strategist Yung-Yu Ma says while there are "individual pockets of speculation," that doesn't necessarily translate to broader market frothiness. He also highlights market drivers that could fuel gains. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Well, stocks closed at yet another record on Monday, making for the 15th all-time high for the S&P 500 in 2025. With stocks at this level, should investors be concerned about markets getting frothy, about extended valuations? Want to bring in Yong-Yu Ma, PNC Asset Management Group Chief Investment strategist. It's great to see you. So, this has been an ongoing question, right? Because we keep seeing markets hit highs, and we keep seeing the price earnings ratio move higher for the S&P 500. Do you think we are in a sort of frothy period here? Thanks, Julie. It's great to be here. I think we have to distinguish between pockets of speculation and outright excessive market froth. I don't think we have excessive market froth here. Yes, you can point to individual pockets of speculation, which is natural actually, after two years of strong gains in 2023, 2024, uh right now where we are in the S&P 500 hitting new highs. You're going to see some pockets of speculation. But it's really not until you see sort of rampant excessive froth across the board that you should really be concerned that markets have just gone too far and priced in too much. I don't think we're at that point. I don't even think we're close to that point for that matter. Yong-Yu, just for reference, what would that look like? What signals would you be looking for? Yeah, there are a few big ones. Investor sentiment right now is just not it it's actually pretty neutral if you look at some of the survey measures of investor sentiment that during times of froth tend to stay high, even during pullbacks, tend to stay high. You're seeing them read pretty neutral these days. The IPO market is just getting back to what I would say is a normal healthy level rather than sort of a booming IPO market where, uh, you're just getting a flood of companies coming to the market, massive first day gains across the board. That's really some signs that you would see, uh, froth really taking hold across the market. I think you you might see some meme stocks, as we're seeing now, uh, being speculative, but that doesn't mean there's across the board, uh, froth that's in the market right now. Gotcha. So, in terms of what is driving markets higher that might be sort of more fundamental here, is it as simple as earnings? That we continue to see earnings come in perhaps better than feared, and we're seeing that fundamental strength, the consumer keeps spending, etc. I think earnings are part of it. Uh, inflation is part of it. I think there's a belief in the marketplace right now that inflation will be transitory and that the Fed will cut rates, uh, not not this week, of course, but later in the year the Fed will begin a new rate cutting campaign. And of course, tech and AI and and the strength of that and the spending that goes into that are just very strong drivers, and there's a lot of momentum that doesn't look like it's going to be slow down anytime soon. So, I think really those drivers when you put that together in the context of a macroeconomic environment, we look six months out, we're getting interest rate cuts, we're getting stimulus from the fiscal spending or the the fiscal budget bill. And you have an environment where those drivers that are in place, uh, can really remain strong and have some more tail winds, uh, with the Fed cutting rates. I think that's what the market is keying off of right here.
Yahoo
2 days ago
- Business
- Yahoo
Fed expected to hold rates steady, but 2 officials might dissent
The Federal Reserve kicks off its July meeting on Tuesday, with Fed Chair Jerome Powell set to speak on Wednesday and deliver the central bank's latest interest rate decision. Markets are largely expecting the Fed to hold rates steady, but Yahoo Finance Senior Fed Reporter Jennifer Schonberger outlines what she's watching for during this meeting, including potential disagreement among Fed officials. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Obviously, Jen, the Fed is under a microscope right now, but as uh many, many Fed watchers have been reminding us on this program, the Fed is not one person, right? The Fed is a whole committee. And so, what could that sort of look like the debate within the room? Not that we're going to know that today necessarily, um, the the sort of color of it, but still, what can we expect? Yeah, lots to pick apart there, Julie. As you said, the Fed widely expected to hold rate steady Wednesday afternoon as the majority of the committee uh favors a wait and see mode to see if tariffs are indeed impacting inflation as we go through the summer months, likely to spark further ire from the president who's been hammering the central bank. But I am watching closely to see if we see two dissents from two different Federal Reserve governors. Those are Chris Waller and Michelle Bowman. Ahead of this meeting, Waller clearly said he was in favor of cutting rates. He thinks that any inflation that we we we would see from tariffs would be a one-time increase in pricing, and that would be something that the Fed could look through. He's also concerned that private sector job growth is stalling. Now, Bowman on the other hand had mentioned in June that inflation has come in benign and if it continues to come in benign that she would support a rate cut. Uh the last inflation report, maybe a bit of a gray area there, as we are starting to see some tariffs come through on the good side of the equation. The service is looking okay right now, though Bowman also saying she's more concerned about the employment side of the dual mandate. If we were to see do two dissents from these two Fed governors tomorrow, Julie, that would mark the first time since December 1993. Wow. So, not common to say the least. Just just quickly, Jen, there had been a lawsuit that was trying to force live streaming of the Fed meeting. What happened with that? Wow. Right. Well, uh hedge fund Azoria, which is run by James Fishback, uh who was close to the White House had sued the white had sued the Federal Reserve, rather, under the grounds that it was violating the Sunshine Act of 1976. Under that act, basically says that all federal agencies need to keep their meetings open. During an emergency hearing yesterday in federal court here in Washington, the judge denied that, saying that the Fed is not technically or the FOMC is not technically an agency. It's part of a larger Federal Reserve system. And so, the Sunshine Act doesn't apply here. Though, this is probably not the last we are going to hear from Fishback and his hedge fund Azoria on this issue. He says that the Fed is trying to skirt this by essentially having a joint meeting between the Federal Reserve Board of Governors and the FOMC. So we will see how this continues to play out in the court system. But today, we will see another closed-door meeting. It will not be live. Right. As is typical. Yes. Brooke Josh, Jennifer, thank you so much.
Yahoo
2 days ago
- Business
- Yahoo
EU trade deal: What to expect in markets & earnings this week
Stocks (^GSPC, ^IXIC, ^DJI) are higher as investors look past tariff headlines and focus on upcoming tech earnings from giants like Apple (AAPL) and Microsoft (MSFT). Yahoo Finance Senior Reporters Brooke DiPalma, Josh Schafer, and Allie Canal explain what easing EU tariffs mean for liquor stocks and how market euphoria is shaping investor sentiment. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Brooke, let's start with you, because as we've been talking about in recent days, we don't necessarily see a one-to-one correlation between these trade headlines anymore and the broader market. But certainly, we do see individual stocks and individual sectors that are more directly impacted by all of this, that are seeing a movement, and that includes some of the industries that you cover. Yeah, absolutely. What we're seeing here is stocks roughly flat, and, uh, you're, Danny, saying in a note this morning that the financial markets anticipated the latest deal and the reaction to it is likely to be relatively muted this week. Of course, investors are thinking big picture here. They're not just now uh solely focusing on these latest trade deals, especially with the EU, but rather, they're looking out to these tech earnings, which will be, you know, worth $11 trillion of companies like Microsoft, Apple, Amazon, as well as Meta here. And really, what they're looking forward to is these companies reporting their really, their outlook for what this could look like at the rest of the year. Is Apple able to overcome these latest uh trade headlines? Will they be able to to ultimately get in on this AI revolution? And ultimately, will their earnings beat despite all this noise that they have been in focus over the past second quarterly reports? Of course, in addition to that, once again, AI will be in focus. And largely, what we've seen here is just this push away of investors solely focusing on these trade headlines, but rather focusing on exactly how companies, key key companies like Delta, like Levi's, as well as others, including Starbucks this week, have been able to overcome this environment with so much uncertainty, especially around the consumer. Hey, Brooke, so talk to me about the um liquor companies here this morning and and the action that we're seeing there. Yeah, what we're really hearing from key consumer groups around the spirits, as well as wine, is this hope that we're going to see the zero to zero tariff. Of course, Brown-Forman, Diageo, Pernod Ricard, those were companies that were uh concerned about that 100% EU tariff that was speculated to go into effect. Now they're hoping for those to sort of back down. And investors are certainly trying to understand and digest, you know, in this new environment where we're looking more at that 15% baseline, they're also at the same time hoping that that tariff comes down to zero for key distillery companies like a Brown-Forman, ultimately, that whiskey headline that went into uh that made headlines rather a few months ago where there was lots of nerve about the 100% uh tariff rather. Now we're seeing that slowly fear sort of go away. Um and, you know, when we talk about also the sort of earnings optimism that's in the background, even with the trade stuff at the forefront, I guess, Josh, that's one of the reasons that we saw John Stoltzfus already a big bull got a little more bullish. Yeah, so John Stoltzfus over at Oppenheimer, Julie, the chief strategist over there, coming back out and saying 7,100 for the year end for the S&P 500. Now, that was his previous target before the April tariff turmoil that sort of sent us way down, right? S&P 500 fell 19%. Picked a trough there, but he came out on Sunday night. Now saying 7,100, he is at the top of the chart that you're looking at on your screen there. Stoltzfus saying earnings per share of about $270 to $275 this year, a PE of nearly 26 times next 12 months earnings, which should be uh quite highly valued and something that we talk about quite a lot here. But Stoltzfus is essentially arguing that with most of the trade uncertainty now passed, you take a look at these earnings, as Brooke was sort of just hitting on, you look at the guidance that you've seen over the next six months, even into 2026. I was looking through some of the FactSet numbers over the weekend. I mean, over the last month, you've had earnings estimates for the next two quarters and the next year actually move higher. So when you think about what these tariffs are meaning for corporate profits, they're not expected to really compress corporate profits, at least at this point. Remember, we're only a third of the way through earnings season. But someone like Stoltzfus takes a look at what he's seeing in the market with the rally and seeing sort of this bubbling continued to brew higher, right? I hate to use the word bubble, but starting to brew a little bit higher. And he says, all right, I think the market can continue to trade at a high multiple and probably be supported as well by some continued earnings growth through the end of the year. I think we can use the word bubble sometimes, Josh. It's okay. I mean, Allie, um, you used the word euphoria, uh, which I think is another version, right, of of bubble and whether we're seeing bubble behavior. You looked into that in uh a story you wrote over the weekend. And, you know, there is this view of what Josh is saying and what John Stoltzfus is saying that there is earnings growth to actually back it up. But what were the folks that you were talking to saying? Yeah, so Citi has a great indicator. It's called the Levkovich Index. And this is based on hard economic data and really stats out there in the market. So margin levels, short interest, and options pricing. Now, that hit a level of 0.65 on Friday. Now, this was above the 0.49 that was seen in the week prior. And the threshold there is 0.38. That signals euphoria. And we've seen in the past that markets can really trade in this euphoric territory for a long time. The problem is, is that when you have a lot of optimism in the market, that makes the fall, the eventual fall hurt a lot more. And that is something that I spoke with uh Citi analyst, Drew Pettit about. And he told me that, you know, at this current moment, we have speculative trading, we have the rise of meme stocks. All of that is making strategists a little bit on edge about how optimistic markets currently are. At the same time, though, when we talk about this bubble activity, this behavior in from the part of investors, if you look back in history at the dot-com bubble, what we saw in 2021, we're in a different spot today. And a large part of that is because of the earnings growth that you mentioned. That's not to say that there aren't some cracks underneath the surface, particularly when we look at some of those consumer names that are more exposed to lower income consumers. We have seen some softness in demand there. But overall, we are seeing solid beats. According to FactSet, we're continuing to rise when it comes to long-term earnings growth, not just for 2025, but also 2026 and beyond. So that is all leading to a lot of the optimism that you're seeing in markets right now and also a lot of the analyst price targets uh that we continue to chase higher and higher as we continue to see these record highs.
Yahoo
2 days ago
- Business
- Yahoo
Market needs strong earnings & jobs data to maintain highs
As the S&P 500 (^GSPC) and the Nasdaq Composite (^IXIC) trade at record highs, the Morning Brief team discusses what it will take for the markets to maintain their upward momentum. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. So as we are looking at the sort of record after record after record that we have been hitting here Brook, um, what have we been seeing in terms of commentary? Yeah, in terms of commentary is what analysts, strategist expect is that we need to hold on to this momentum in order to sustain these record highs, and that will come into play as we hear from big tech, like metal, meta, Apple, Microsoft as well as Amazon this week. They need to beat earnings, and they need to show a positive guidance, a positive outlook on the second half of these years as AI takes place, as tariffs go into effect. What we're really hearing is that in addition to that, we also have that jobs report out on Friday. We want to hear that jobs were added. We want to see that unemployment rates stay steady, and that's what really could hold on and lead to this ongoing momentum that we've seen in the markets. Once again, leading to those record highs over these past few weeks. And Josh, what do you think where are sort of the market's attention focused here? It seems like it is mostly on earnings at this point. Yeah, actually, definitely. I mean the Fed meeting starting today, right? But of course you won't really get a lot of news there until probably chair Powell's press conference at 2:30. And then even just thinking about kind of the the rally that we've had over the last three months and what's been driving the market. I mean, yes, there's been some volatility around specifically President Trump commenting on interest rates, and commenting on chair Powell's position, but there hasn't been a lot of real debate about necessarily when the Fed will be cutting in terms of the investor story, right? I don't think that's really been driving the market throughout this rally. We've had moments where markets were pricing in more interest rate cuts this year, and the stocks have been rising, and moments where markets have been pricing in less interest rate cuts, and stocks have been rising. I recently pulled 35 economists and strategists for the most important chart right now for investors, and one of them sent me a chart that relates to the Fed. Uh, so it's a broad question, and they can answer with anything. And I sort of took out of that if only one of them when usually five or 10 are talking about interest rates of the Fed. Perhaps maybe that's just not the key market driver right now when you think about what's been leading the market higher, it's been tech again. You have tech earnings this week, a wide swath of tech earnings over the next two weeks beyond just mega caps. That seems to perhaps be more important right now, as earnings have been leading in that sector. Do they continue to lead, and do you continue to see growth there? Seems to be a key question amongst strategies. Related Videos Trading day takeaways: Nvidia record, US dollar moves, oil pops US confirms 15% EU tariffs: Where China & other countries stand US–EU trade deal: Here's what's in the agreement EU trade deal: What to expect in markets & earnings this week Sign in to access your portfolio
